Continuing subdued economic activity kept stock prices in many of the major markets weak during the first quarter of 1992. In Japan, the equity market fell throughout the quarter, against the background of a faster than expected economic slowdown and continuing political and financial scandals. Prices reached their lowest level for five years during the quarter (and subsequently slipped further) and daily turnover of Japanese equities dropped to a ten-year low in February. Concern over the timing and strength of the US recovery depressed the US equity markets towards the end of the first quarter, despite the cut in the discount rate in December. In Europe, stock markets generally rose during the quarter, but turnover in some major markets slackened towards the end as domestic political uncertainties deterred investors. A number of other exchanges (Hong Kong, Malaysia and Mexico) posted notable price gains over the quarter and stock markets in some developing countries gained from further foreign participation, through more issues of American Depositary Receipts and through privatisations of large state-owned institutions, such as Mexican banks.